The direction of the market is becoming more clear, with solid earnings and a light at the end of the tunnel for Europe. As a result the major indices have increased by more than 13% since October 4 but are still trading 6% lower from the market value before the sell-off in late July. And although most stocks have posted large gains during this time there are still a large number of stocks presenting value. Below are 6 stocks that have posted large gains during the last three weeks but are still presenting value and would make a good investment with short and long-term gains.
Sirius XM (NASDAQ:SIRI) has posted gains of 26% over the last three weeks but is trading with a three month loss of 14%. The stock trades 105% more volatile than the market therefore it lost value fast when the market fell. But it's slowly recovered as investors have become more confident that the economy is improving and that a recession in not a part of the future. This company is directly affected by the auto industry, which I believe is the best industry within the market over the next several years. New car sales have steadily increased during the last year which reflects as stronger earnings for Sirius which has improved its retention rates to capitalize on the opportunity. And with a new system, Sirius 2.0, the company will offer the same great service of Sirius XM with smart-phone like capabilities and I expect retention rates to drastically improve during the upcoming quarters. The stock did not have a positive reaction after its previous quarter exceeded expectations with the market in a downtrend. However this upcoming quarter, Nov. 1, should cause the stock to trend higher and continue its trend unless some negative news from Europe causes the markets to sell. And with a price increase taking place guidance should be strong which should send this stock trending above 52 week highs.
General Motors (NYSE:GM) has posted a three month loss of 8% without any negative developments related to the company. The company has made incredible progress over the last year arising from bankruptcy and completely reinventing its products. Yet the stock fell hard during the sell-off in August as a result of investor's fear regarding the economy. I believe its loss was a result of the recession and its performance during the recession, which remains fresh on the investor's mind. Besides banks the auto industry got hit the hardest in 2008 and I believe that as rumors and speculation of a recession began to stir, during the last three months, it caused investors to react and sell GM which performed so horribly during that time. And of course there is no proof to my belief but I have desperately tried to understand why this stock would have traded so low, and I have been unable to find one logical reason. The company's earnings and revenue have both drastically improved along with monthly sales increasing by large margins during each month of the last quarter. Therefore I believe that GM will recover very soon, and will easily surpass its $39.48 52 week high with the company making progress that simply cannot be ignored. And with a P/E of 5.5 and many of its largest questions already answered, such as the labor issue, I can't find anything standing in the company's way of accelerated growth.
Citigroup (NYSE:C) has posted gains of 45% during the last three weeks but is still trading with a 12% loss over the last three months. I believe the banking industry will see substantial growth over the next year and that several of the large bank stocks fell for similar reasons as the auto industry. Yet there was, and still is, some concern over its exposure to the European debt crisis and sovereign debt. And since Citigroup has a strong global presence this stock posted significant loss. But if you look at the bottom line and forget about the "what if" scenarios then you would see that Citigroup is performing quite well and is presenting a substantial amount of value. It's trading way below its book value and its earnings have continued to increase and have exceeded expectations during the last year. Therefore I am bullish on Citigroup and believe its $43.59 price target will be surpassed and although I feel that there are many banks in a similar position I believe Citigroup is near the top of the value list with a strong presence in corporate banking which continues to be a strength.
I have been singing Corning's (NYSE:GLW) praise to anyone that will listen. And I was quite surprised when the company exceeded expectations with lower costs in the display segment. There has been so much pessimism surrounding the economy and a lower demand for televisions which made me believe that Corning was still two quarters away from seeing growth in a way that would please the market. Therefore I was not necessarily looking for the company to exceed expectations but rather build on its emerging segments. Yet because of its decent quarter there is a new spark among investors and with its emerging segments continuing to improve, including its impressive Gorilla Glass, I believe the stock will recover much sooner than I had originally anticipated. Yet regardless of short-term gains this stock is not for the short term trader but rather the long-term investor because the large returns are in the future of this company. There are very few companies with a longer history of innovation and success compared to Corning and because of the rapid growth of its emerging markets, despite a slumping display segment, I believe a quick recovery could be a part of this stocks future. And with a three month loss of 5% and a $10 billion sales target over the next three years I believe it would be hard to go wrong with GLW and that its current price would make a great addition to anyone's portfolio.
I like Kroger (NYSE:KR) more than Wal-Mart or any other retail stock as both a short and long-term investment. The stock is trading with an 6% loss over the last three months but has regained 8% of its losses during the last three weeks and I believe it will easily surpass its 52 week high in the near future. Before the sell-off within the market Kroger was trading at 52 week highs and was trending higher. The reason was because of its impressive growth during the last 12 months that is expected to continue. Kroger is now posting its best numbers in the history of its company and is growing by billions year-over-year. During its most recent quarter the company increased revenue by more than $2 billion year-over-year and has posted $87.06 billion over the last 12 months compared to $82.2 billion in 2010. I believe the growth of the company can be credited to one strategic decision and that is Kroger's decision to make every customer feel as though it's saving them the most amount of money. Kroger uses savings cards which give you special prices for products that are marked and gives you points based on how much you spend at Kroger. Depending on which area of the country you will either receive savings on gas or cash back. And since gas is so expensive the consumer kills two birds with one stone by saving additional money on groceries at Kroger and saves money on gas by shopping at Kroger. The company has also drastically improved its coupons by offering a large selection depending on the store location, which can be uploaded to your smart-phone or mailed to your home based on which products you purchase. The additional savings have done wanders for this company and give the consumer the illusion that they are saving the most amount of money, regardless if it's really cheaper. The only concern is profit margins which are extremely low. However I believe that margins will improve over the next three years as Kroger adds more stores that sale merchandise and closes the gap between it and Wal-Mart. And as Kroger adds more "super stores" that offer both groceries and merchandise its margins should improve and cause earnings and the stock to increase. Therefore I believe that Kroger has the most upside potential and with a dividend that consistently increases it's hard to find one reason not to like Kroger as an investment.
Caterpillar (NYSE:CAT) just announced record earnings and is still trading 20% off its 52 week high. Over the last three weeks CAT has gained more than 35% after getting crushed in early August. I believe it's nothing but gains from here with CAT releasing incredible earnings to beat high expectations with a 40% gain in both revenue and income, including a strong backlog. I am simply amazed by Caterpillar's ability to keep growing despite issues within the global economy. A large portion of Caterpillar's success has been a result of an increase in demand for mining along with emerging markets. These two segments of the company have grown at an incredible rate and have led the company to record earnings despite a slowdown in U.S. construction. I believe that all segments of construction will improve during the next five years as the economy improves which will only add to the growth of Caterpillar since new machinery will be needed. But with a slowdown in the U.S. Caterpillar has evolved and developed its emerging markets resulting in the company having one of the strongest backlogs in its storied history. Therefore the company is well positioned for future growth and will most likely post huge gains over the next five years. And with a 20% discount from its 52 week high and a yield of 2.01 I believe that CAT will make a great investment along with being a safe pick in a volatile market.
Disclosure: I am long GM, GLW, CAT. As with any investment, due diligence is required. The opinions in this article are not intended to be used to make a particular investment or follow a particular strategy.